757 / Who may use head-of-household rates?

The 2017 tax reform legislation imposes a due diligence requirement for tax preparers in determining whether head-of-household filing status is appropriate. A $500 penalty will now apply for each failure of a tax preparer to satisfy due diligence requirements with respect to determining head-of-household status.¹ A tax preparer can rely in good faith, without verification, on information furnished by the client, but cannot ignore information furnished to or known by the preparer.

An individual who meets the four requirements below may use the applicable head-of-household rates:

(1)The individual must be (a) unmarried, or (b) legally separated from his spouse under a decree of divorce or of separate maintenance, or (c) married, living apart from his spouse during the last six months of the taxable year, and maintaining as his home a household that constitutes the principal place of abode for a “qualifying child.”² See Q 729 with respect to whom the individual is entitled to claim a deduction, and with respect to whom the taxpayer furnishes over one-half the cost of maintaining such household during the taxable year.³

(2)The individual must maintain as his home a household in which one or more of the following persons lives: (a) a qualifying child (if that individual is unmarried, it is not necessary that he have less than the personal exemption amount ($4,200 in 2019, $4,300 in 2020-2021, $4,400 in 2022, $4,700 in 2023 and $5,000 in 2024)⁴ of income or that the head-of-household furnish more than one-half his support; if the qualifying child is married, he must qualify as a dependent of the taxpayer claiming head-of-household status (or, would qualify except for the waiver of the exemption by the custodial parent (see Q 729)), or (b) any other person for whom the taxpayer can claim a dependency exemption (pre-2018) except a cousin or unrelated person living in the household.⁵ An exception to this rule is made with respect to a taxpayer’s dependent mother or father: so long as he maintains the household in which the dependent parent lives, it need not be his home.⁶

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Planning Point: For purposes of the definition of “dependent” for determining head of household status, the IRS has released guidance stating that the exemption amount (which was otherwise reduced to zero for 2018-2025) will be treated as though it remained at the pre-reform amount of $4,200 in 2019, $4,300 in 2020-2021, $4,400 in 2022, $4,700 in 2023 and  $5,000 in 2024.⁷

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(3)The individual must contribute over one-half the cost of maintaining the home.⁸